FM cautions stock market investors on risks

New Delhi: Dabbling in stock markets could cost investors dearly unless they understand what risks await them, although the markets are less mysterious than they were before, Finance Minister P Chidambaram cautioned on 19 July.

“I think people understand markets and more and more people prefer markets. They did in 1990s but burnt their fingers. So they withdrew. They again came back in late 1990s and again burnt their fingers,” he said at a function last night, while advising more awareness about financial markets and role of regulators.

Two scams, widely known as Harshad Mehta and Ketan Parekh scams, rocked Indian stock markets in early 1990s and 2001.

Market regulator Sebi again unearthed scams in IPOs, beginning from public offers of Maruti to Suzlon during 2003-05, pointing out irregularities in allocating retail portions of shares.

However, Indian markets were now one of the best regulated markets in the world, Chidambaram said at a function of CNBC-TV18 to launch an awareness booklet for first-time investors, called “Pehla Kadam” (first step).

Over the years, much of the mystery about markets has been removed “layer by layer”, the Finance Minister said.

Highlighting the need for spreading financial awareness right from the school level, he said there are enough students at 10+2 level who can absorb lessons in financial literacy.

“We have to tell the people what is the meaning of risk and how it could be mitigated,” he said.